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British lender Paragon posts first-half profit growth

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(Reuters) – Britain’s mortgage lender Paragon Banking Group <PARA.L> reported a 4.7 percent rise in first-half underlying profit on Thursday, helped by a surge in lending volumes.

New buy-to-let lending business – used by homeowners and landlords to fund purchases of property which they then rent out – rose over 20 percent to 670.5 million pounds in the first six months ended March 31, from 556.2 million pounds a year earlier.

Paragon has been increasingly focusing on professional landlords to help drive a surge in this business even as tax and regulatory changes have made the property market tougher for smaller investors.

Paragon said that since no new regulations have been introduced in the last six months, the buy-to-let market is slowly stabilising, although new house purchase funding activity is lower than that seen in previous years.

The pipeline for new buy-to-let lending was up 6.1 percent to 787.6 million pounds from 742.3 million pounds a year ago.

Commercial lending volume rose 49 percent in the first half of the year to 269.3 million pounds, while mortgage lending increased nearly 23 percent to 721 million pounds.

The company raised its outlook for commercial lending to over 600 million pounds from a prior estimate of 500 million pounds on expectations of strong lending volumes throughout the year.

Mortgage volumes for the year is expected to be over 1.6 billion pounds, the company said.

Paragon said asset finance lending rose to 163.8 million pounds from 106.6 million pounds a year earlier, benefiting from the acquisition of legal specialist finance broker Iceberg in January.

The company’s pre-tax profit rose to 77.2 million pounds from 69.4 million pounds a year ago.

Shares of the company was down 0.5 percent at 549 pence in early trading.

(Reporting by Sangameswaran S in Bengaluru; Editing by Sunil Nair and Arun Koyyur)

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